When buying a health insurance plan, it is important to understand the language. Like all specialized subjects, health insurance has its own terminology. Learning what the terms mean makes it possible to understand the costs and benefits of a given plan and how it can be compared to others. You need to know the following eight terms before choosing a health insurance plan.
A deductible is an amount that you have to pay out of your own pocket each year for covered health care costs before your health insurance will take effect. For example, if you have a deductible of $ 1,000, your health insurance plan will not start paying out until you have spent $ 1,000 on health care that year, when your coverage takes effect. The deductible starts again at the beginning of each year and must be met before the coverage begins. However, some preventive care, such as an annual wellness visit, may be covered by certain plans before the deductible is met.
Your premiums are the purchase payments for your health insurance. You can pay premiums monthly, quarterly or annually (usually monthly), depending on the plan. Tax deductions are available to offset the cost of health insurance purchased on the Affordable Care Act marketplace.
Also known as a “copay”, this is the amount you have to pay each time you receive certain types of medical care, such as an office visit. For example, you may have to pay $ 30 to visit a specialist or $ 60 for an emergency visit.
According to some health plans, once you have met your annual deductible, you pay a percentage of your medical expenses. This percentage is your co-insurance. If the cost of your treatment is $ 100 and your co-insurance is $ 20, you pay $ 20 and the insurance company pays $ 80.
Max out of pocket
This is the total maximum amount you have to pay out of pocket in a given year, including deductible, co-insurance and copays. It does not include premiums. Once you have reached the maximum amount, the insurance company pays all covered expenses for the rest of the year.
A health care organization (HMO) is a type of health insurance plan that offers the least flexibility in choosing a provider. You must go to a provider within the plan’s network to be covered by healthcare services.
A preferred provider organization (PPO) is a type of health plan that can enable you to visit a physician or specialist outside the plan’s network without a referral from a primary care physician. But if you do, it will probably cost you more.
Health savings account
A health savings account (HSA) allows you to set aside dollars before tax for medical expenses, which lowers your tax bill. Funds remaining in an HSA at the end of the year will be rolled over to the following year.
If you want professional help with choosing a health insurance plan, our friendly agent will be happy to help.